Technology automation can simplify revenue management at hotels
Posted by Sindhu Mohanakrishnan, Sr VP – Marketing and Communications, RezNext Global Solutions
Peak seasons, non-peak seasons, competitor rates, discounts, occupancy, room availability, ancillary services – there’s a lot a revenue manager needs to consider before arriving at his pricing strategy. Doing this manually is not only time-consuming but also prone to errors. But not many hoteliers have access to fast data analytic tools that can offer them actionable insights into revenue trends. Often, rate strategies are developed based on the learning from the past year – but the market situation might not be the same this year. In a recent survey, many hoteliers also indicated that they decide their revenue strategies on pure gut-feel.
How does an improper pricing strategy affect your brand?
Pricing affects brand perception. Neither can a luxury hotel drop its price arbitrarily nor can a budget hotel hike up its rates exorbitantly as that will lead to brand dilution. Consumers associate a value to your brand and price plays an important part in it – defining the positioning of your hotel. Impulsively dropping your rates to beat competition may affect both your brand positioning as well as the customer’s perception of your brand.
How can hotels then deal with challenges of improving profitability and occupancy?
This is where technology automation can make a big difference in the life of a revenue manager. The hotel PMS is a repository of big data. It has records of month-on-month demand patterns, supply trends, consumer purchase behaviour, channel performance and more. However, it is impossible for hoteliers to collate all this information manually and analyse them to arrive at key insights to respond quickly to demand patterns.
A next-gen revenue management technology that leverages data analytics at the core can help hoteliers sift through tons of data at high speed and provide intelligible insight into current revenue situation, forecast for a month, quarter or year, consumer purchase patterns, competitor strategies and more. Such technology also provides recommendations on pricing and distribution based on what rates are yielding best in which season and on what channels. It can also provide insights into market segments and what promotions can work best with them. Revenue managers can also calculate the displacement value of bookings to accept the profitable ones only.
This means hotels can now look beyond competitor rates and discounted pricing into a rate strategy that evolves from what the consumer is seeking. It is no longer about dropping rates, but creating exclusive packages and promotional strategies based on consumer demand. It is also about identifying the net worth of the guest and adopting a relationship-based approach with high value customers. Most importantly, operational decisions can be made real-time through a seamless flow of information across hotel departments, enabling hoteliers to be the first-to-market their customer-centric offerings on the right channels.
While technology automation – which is built with prognostic intelligence and scientific algorithms to offer price optimisation recommendations – can simplify taking crucial revenue decisions, a lot of onus still lies with the revenue manager to identify the correct parameters and collate the right type of data to feed into the revenue management system. Revenue managers should also continue to be on the look-out for identifying new revenue generating opportunities and assessing their viability through the revenue management system.
Read an article by Mike Kistner, CEO, RezNext, on the importance of revenue management for hoteliers and how RezNext can help them take profitable decisions at the right time.